Disabled Under 65: Will a Medicare Supplement Plan Save You Money?

Key Takeaways:

• Medicare benefits are the same for people under 65 with disabilities as they are for seniors — but supplemental insurance is different.

• Medicare supplements for disabled under 65 are different in every state — there are no specific federal guidelines.

• If you are disabled under 65, you may not be able to find — or afford — the Medicare supplement you want.

• A Medicare Advantage plan — as opposed to a Medigap plan — may make more sense for you if you are disabled under 65.

It's not only seniors who are eligible for Medicare. Over 15 percent of Medicare beneficiaries are under age 65. In fact, there is only one eligibility requirement: if you are under 65, you must have received Social Security Disability Insurance (SSDI) benefits for at least 24 months.

And while applying and qualifying for SSDI benefits requires more effort, once you've been receiving those benefits, enrolling in Medicare is pretty simple. Most disabled individuals under 65 are automatically enrolled in Medicare Part A and Part B (Original Medicare) on the first day of their 25th month of receiving SSDI benefits.

Plus, some disabled people under the age of 65 can bypass part or all of that 24-month waiting period. This includes people who are diagnosed with one of the following conditions:

• End-stage renal disease (also called kidney failure or ESRD): You are typically eligible for Medicare disability benefits after a kidney transplant or after three full months of regular dialysis treatment.

• Lou Gehrig's disease (also called Amyotrophic Lateral Sclerosis, or ALS): You are eligible for Medicare disability immediately upon collecting SSDI benefits.

What Kind of Coverage Do You Get if Disabled Under 65?

Medicare coverage for those who are disabled under age 65 is the exact same coverage that seniors over age 65 receive. Here's a quick rundown of what Original Medicare covers:

Part A covers inpatient care including:

• Hospital stays

• Stays at skilled nursing facilities

• Nursing home care

• Hospice care

• Home health care

Part B covers services that are medically necessary to diagnose or treat a medical condition, including:

• Doctor visits (both for illness and preventive care)

• Diagnostic tests

• Mental health care

• Medical supplies and equipment

• Ambulance transportation

• Participation in some clinical trials

Do You Pay More for Medicare if Disabled Under 65?

Original Medicare goes a long way in covering healthcare expenses for those who are disabled under 65 — people who may pay exorbitant premiums for private health insurance, or even be excluded completely. But Parts A and B don't cover every healthcare expense, and they come with their own out-of-pocket costs. Those include:

*note: SSDI benefits do not typically count as taxable income, so it's highly unlikely that most disabled Medicare beneficiaries under age 65 would have to pay higher Part B premiums. In fact, only 7 percent of Medicare beneficiaries under age 65 report incomes of $50,000 or more, according to data from the Kaiser Family Foundation.

Medicare Supplements for Disabled Under 65

If you are disabled under 65, you likely have complex conditions and may also have a limited income. In that case, Medicare's out-of-pocket costs can be burdensome. Since Medicare doesn't cap out-of-pocket expenses, the costs could literally be endless. To help with those costs, you can opt to purchase extra coverage, like a Medicare Supplement plan.

Also called Medigap, Medicare Supplement plans help cover Medicare's out-of-pocket costs and are sold by private insurance companies. There are eight plans to choose from in 2020, each with different levels of coverage and costs.

Unfortunately, obtaining a Medicare Supplement plan is easier said than done if you are disabled under 65. For one thing, federal law doesn't require insurance companies to sell Medigap plans to beneficiaries under age 65.

Depending on the laws in your state, you may not be able to buy the Medicare Supplement plan you want, or any plan at all until you turn 65. And even if Medigap plans are available to you, the costs may be much higher than if you were 65 or older.

Not only that, but consider the fact that the cost of Medicare supplements can increase annually, and for disabled beneficiaries under age 65, those increases can be significant. So even if a Medigap premium is manageable at first, you may not be able to afford it for many years beyond that.

Is Medicare Advantage a Better Choice?

While the costs of a Medicare Supplement plan can be prohibitive for those disabled under 65, Medicare Advantage plans may be more affordable.

Reminder: Medicare Advantage plans bundle Medicare Parts A and B with services that Original Medicare doesn't cover. They are offered by private insurance companies contracted with Medicare.

Medicare Advantage plans charge each person on the plan the same rate, and rate increases tend to be smaller than with Medigap. Plus, you can qualify for coverage as long as you don't have kidney failure, even if you have other disabilities that would disqualify you from Medigap plans.

Medicare Special Needs Plans

One type of Medicare Advantage plan, the Medicare Special Needs Plan (SNP), is structured especially for beneficiaries with certain diseases, disabilities, or conditions. SNPs can be very cost-effective, and often include the following benefits:

• Prescription drug coverage with formularies specifically for medications common to people with the particular condition addressed by the plan.

• A provider network including specialists in the diseases addressed by the plan.

• Primary care doctors familiar with your condition to help coordinate your care and administer preventive care.

Overall, obtaining a Medicare Supplement or Medicare Advantage plan, can be frustrating if you are disabled under age 65. Out of the options, you may find that a Medicare Advantage Special Needs Plan is a good fit for you. Luckily, once you do turn 65, you'll have the ability to change plans, sign up for one if you haven't already, and reevaluate your coverage choices — the same options as all seniors over age 65.

Andrea Bonner is a healthcare writer with more than 10 years of experience covering senior health. She is from the Raleigh-Durham area in North Carolina.